Why The Bancorp Inc. Shares Slid
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of The Bancorp , a banking products and services provider to retail and commercial markets, as well as small and mid-sized business within the U.S., dipped as much as 17% after reporting its first-quarter results after the closing bell last night.
So what: For the quarter, The Bancorp saw revenue increase a robust 20% to $53.6 million on the heels of a 26% increase in non-interest income and a 17% jump in net interest income. Outstanding loans also grew by 17% from the year-ago period. Where the wheels fell off the wagon was when it reported an adjusted profit of just $0.01 per share, down 95% from the $0.20 per share recorded during this quarter last year, and well below Wall Street's forecast of $0.28 per share. As noted by CEO Besty Cohen, "an additional loan loss provision of $11.8 million principally related to newly identified adversely classified loans" adversely affected its bottom line.
Now what: Overall, it wasn't as terrible of a quarter as it might appear on the surface. There were a few mild concerns, such as a rise in the number of commercial and construction loan charge-offs and a sizable increase in the number of loans 90 or more days past due collecting interest from the year-ago quarter (189 versus 110). However, there were also a number of positives, including a five basis point improvement in net interest margin from the prior year, a 5% improvement to book value, and the aforementioned robust revenue growth. While the loan loss surprise wasn't pleasant for shareholders, it's likely a one-time event, meaning if the stock continues to drop it could actually become a bargain for investors seeking a small-cap bank with double-digit growth potential.
The Bancorp may offer plenty of potential to investors, but even it may struggle to keep pace with this top stock in 2014
Give me five minutes and I'll show how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer hand-picks 1 stock with amazing potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on the upcoming year's most lucrative trends. Last year his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252% and 1,303%! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of "The Motley Fool's Top Stock for 2014" today.
The article Why The Bancorp Inc. Shares Slid originally appeared on Fool.com.Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2014 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.